Does Learning A Foreign Language Actually Pay Off?

In purely economic terms, what's the return on investment for learning another language? And does language acquisition carry some value besides the opportunity to earn more?

The most frequent question levelled at Matthew Youlden’s
9 Language Monologue has been, “That’s impressive, but so what? What’s the actual payoff of knowing more than one language?” That’s a fair question, and the rebuttal comes in the form of some hefty, indisputable numbers.

Money, That’s What I Want

The Freakonomics podcast recently asked this very same question, specifically trying to calculate the return on investment (ROI) from learning a second language. The premise of this podcast does have some faults. Trying to quantify the benefit of knowing a second language in strictly economic terms is like trying to determine how tasty a hamburger is by only measuring its calorie count. But let’s humor their analysis for a moment. What were their findings? According to the Freakonomics team, learning another language will only increase your salary by 2%. If you make $30,000 a year, that’s only 600 bucks! How can that be worth countless hours of study?!

But Freakonomics’ conclusion falls apart under more rigorous analysis which shows that, even in strictly economic terms, the return on investment is much, much higher. Even taking the 2% salary bump at face value, when you compound that interest (assuming the $45,000 average starting salary of a university grad, 1% salary increase per year and 2% real return over 40 years) you’d end up with $67,000 extra by the time you retire. Of course, 2% is only an average. Speaking German was calculated to have a premium of 3.8% (that’s $128,000 for your retirement).

High Demand, Short Supply

For a more well-rounded take on how knowing a foreign language can pay off, we asked our friend Rob, who carved himself a lucrative niche thanks to his language skills. He’s had a rewarding and exciting career specifically because he knows multiple languages.

Of the languages that Rob speaks, he’s found that his biggest asset by far has been Dutch – a language that is notoriously unpopular to study. And the main two reasons almost no one bothers to learn it? There are only 23 million native Dutch speakers and almost all of them speak English well. Why bother learning their language when you could unlock the world of 955 million native Mandarin speakers, 405 million native Spanish speakers or 295 million native Arabic speakers? Because although Dutch speakers only make up 0.32% of the world’s population, they account for 1.3% of the world’s GDP. Being one of the few native English speakers who knows their language has made Rob extremely valuable to Dutch firms that conduct their international business in English. Even when his colleagues spoke English 99% perfectly, that 1% gap became his niche – a niche that only a native English speaker can exploit.

But Money Isn’t Everything, Right?

In case you were thinking we’d only measure a foreign language’s “worth” in terms of dollar signs, we haven’t overlooked that another language adds value to your life, not just to the inside of your wallet. What does it mean to live richly?
As Rob expounds, it’s the friends, travels and experiences that have enriched his life. And the money? Well that’s been a welcome side-effect of following his passion.

Ready to learn a new language?

John-Erik was born in Los Angeles, California and grew up in a suburb named after Tarzan (yes, really). He studied art at The Cooper Union in New York and worked as a video editor in LA before turning his attention to writing. He's lived in Berlin since 2009 and has been writing for the Babbel Magazine since 2014. He is also the author and co-creator of the sci-fi adventure comic Golem and Odd. Follow him on Twitter.